Which of the following statements is correct when sellers know more about quality than buyers?
A)High price indicates high quality, but the low price does not imply low quality.
B)Low price indicates low quality, but the high price does not imply high quality.
C)There is a positive relationship between price and product quality.
D)Price is not a reliable indicator of product quality.

Question

Quizplus · Accepted Answer

When sellers have more information about product quality than buyers, price alone may not reliably indicate quality due to information asymmetry.

Which of the Following Statements Is Correct When Sellers Know